How to keep your safe deposit box safe

July 30, 2010|By Doreen Hemlock, South Florida Sun-Sentinel

Safe deposit boxes are supposed to be safe, but Ruth Oppenheimer found otherwise.

The 91-year-old Hollywood resident recently went to her box at a local bank and found the contents missing, according to a report filed with Hollywood police. Cash, documents, more than 20 pieces of jewelry — some with deep sentimental value — all gone, the police report said.

Oppenheimer and her family learned some lessons the hard way since then: The Federal Deposit Insurance Corp. does not insure the contents of safe deposit boxes. The bank claims no liability either, since it said all procedures had been followed correctly at the branch. The family might have been well-compensated if they'd bought private insurance on the contents of the box, but they hadn't.

It's a cautionary tale and unfortunately, not an isolated case, said David McGuinn, a former banker who runs Safe Deposit Specialists, a Houston company that offers training and equipment to banks for safe deposit operations.

While most safe deposit boxes are safe, losses do happen – sometimes from outside criminals or inside theft, or sometimes, when banks merge and a branch is closed, its safe deposit boxes moved, he said.

"The percentage of incidents is low, but the frequency of calls I get about problems seems to be stepping up," said McGuinn, who has served as an expert witness in numerous legal cases involving millions of dollars in losses from safe deposit boxes.

So, what's a consumer to do to minimize the risks of losses at safe deposit boxes?

Be careful what you put in safe deposit boxes. Cash in the box is not insured by the FDIC, so put cash in an insured bank account or elsewhere.

Keep copies of documents placed in a safe deposit box. In case of fire, floods or other problems at the bank, keep copies of documents elsewhere.

Some experts also advise not to keep your original will in the safe deposit box. If you die and if a spouse or other surviving family member is not authorized to access the box, they may need a court order to obtain the will from the box.

Insure jewelry and other valuables with private insurance. Neither the FDIC nor banks themselves provide insurance coverage of items inside a safe deposit box, so tenants need to get their own private insurance for those items.

Look for banks with dual-key systems to access safe deposit boxes. Dual-key systems require both the renter (or his designate) and a member of the bank staff to each produce a key to open a box. The dual-key system offers greater protection than a self-service system with just one key needed to the box.

Some banks also are starting to use a biometric, keyless system that works with a computerized reading of your fingerprint and a personal ID number. But that sophisticated system is relatively expensive and not widely used, McGuinn said.

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Look for banks that have video cameras in the safe deposit box access area. Videos can record movements in the safety deposit area and register if there are thieves or inappropriate access in the area.

Look for banks with a private area to open and view the contents of a box. It's safest when a bank employee takes you to separate viewing area to open your box and leaves you there alone, out of his or her sight, experts say. But when exiting the private viewing area, check you didn't leave items out that can indicate what's inside the box, to limit temptation for theft.

If something goes missing, file a police report. A police report adds credibility to any legal or insurance claim. Also, consider hiring an attorney. Cases involving losses from boxes can drag on for years before a trial. Bank lawyers tend to argue that all procedures were properly followed at the branch, and renters need to provide evidence that they were not, McGuinn said.

Be careful who you designate to open your box. Don't give your key to a bank employee to open your box in your absence. Incidents of theft have occurred, according to FDIC reports.

If you rent a box with others, such as a spouse or relative, they have access to the box. But if you rent alone, you may want to designate a deputy to open the box if you're traveling or unavailable. Deputies may include someone with power-of-attorney over your financial affairs. But that deputy or power-of-attorney cannot open your box after you die, according to Bankrate.com.

Stay up-to-date with rental fees and inform your bank of address changes. In Florida, if rent on a safe deposit box is three months past due, banks send registered mail to the tenant's last known address. If renters don't respond in 30 days, the bank opens the box and stores the contents for three years. It later sends the items to the state as unclaimed property.